Many independent insurance agents and brokers are used to the concept of “paperless processing” since most of the insurance companies they represent utilize imaging and content management technology. For these carriers, paperless processing is used to speed up the underwriting process, improve the accuracy of claims processing, and enable “once and done” customer service.
While independent agents see how the larger insurance carriers use technology, they also wonder how that technology can be utilized in their own organizations. They perceive that the carrier, because of the large volume of transactions that they process, can easily absorb the cost of technology. However, they may think that the cost isn’t economically feasible for a small insurance brokerage.
But, in fact, going paperless is a desirable goal for all insurance agencies, no matter their size. While independent agencies can run the gamut from one-person businesses to a multi-employee/multi-location operation, they all essentially perform the same role for all of their clients: managing the front-end in the sale and administration of almost every insurance product sold.
These independent agencies perform multiple duties. They gather information for the underwriter; manage the complex relationships of numerous insurance companies and thousands of customers; and perform a myriad of customer service roles.
Independent agencies of any size also keep track of the underwriting and servicing requirements in the course of managing endless amounts of business information, billing records, company account reconciliation and other accounting and management reports, representing huge volumes of paper. The difference is simply one of scale and complexity.
Whatever the scale, going paperless renders the agency more efficient across the gamut of activities from the initial underwriting of a client through customer service and the claims process.
Going paperless involves deploying technology to simplify and transform day-to-day business operations–underwriting, customer service and claims–and enables an agency to increase productivity. For example, an agency that is paperless can see its customer service representatives manage 40 to 50 percent more customer accounts. Productivity improvements like this allow for highly profitable growth via acquisition. Until now, the only productivity boost the insurance agency has enjoyed is the relatively uncomplicated task of putting through a renewal on a very simple case.
The commercial underwriting process currently involves a tremendous amount of paper movement, sequential sharing of files and overnight mailing. So, agencies writing commercial insurance are likely to gain the biggest payoff from going paperless.
Commercial underwriting is very low-tech–files and documents are complex, cumbersome and highly paper oriented. While ACORD provides upload capability, there is very little that an agency can upload in terms of forms, OSHA reports, loss control reports, workers’ compensation loss reports, vehicle schedules and so forth.
For most new and renewal submissions, the improvements in technology haven’t changed the way commercial insurance agencies operate compared to 10 or 15 years ago. Most continue to use paper-based processes.
Having migrated to paperless, the commercial agent has available in digital format all of the underwriting files, the application and collateral that an underwriter reviews, e.g., vehicle fleets, driver’s license schedules, OSHA reports, workers’ comp loss reports, etc. This dramatically cuts down on the size and volume of paper files being handled, shared and mailed overnight, and reduces the need to access, locate, gather and distribute such documents in paper format.
In digital format, this information can be sent to multiple insurance companies for underwriting and claims purposes. With hundreds of insurance companies using data management and content management solutions, digitized insurance companies will also be able to respond very efficiently.
In fact, days and weeks will be cut out of the underwriting, rating and quoting process because the agent or broker can now easily handle multiple submissions.
Another of the agency’s payoffs comes when processing renewals. With digital information, it is easier to take a renewal to market, update files and schedules and see what’s going on from an underwriting viewpoint. As with the original underwriting process, it enables the agent to shop for better rates, provide better customer service and become more competitive, through quicker decisions and responses.
Once paperless, the insurance agent also has the ability to share information between the account executives and customer service people across offices and locations. Opportunities to collaborate on information and files between brokers and underwriters are also opened up. In both cases, the parties can share exactly the same information electronically. This is a tremendous help because the agency now has everything necessary to understand the customer from a business and, if need be, a claims point of view.
As well as speeding up underwriting and claims, and improving customer service, agencies gain tremendous return in terms of document storage. Without the physical documents, the need diminishes for filing space. Gone are the file rooms, and the agency’s ability to manage more information significantly increases.
Using workflow technology, independent agencies can develop an automated system for underwriting. This yields improved management, security and control of the entire submission process. Digitizing the process of dealing with big and unusual risks enables an agency to submit and obtain quotes from multiple insurance companies, or the specialty market, for an underwriting assessment.
Paperless inquiries make it possible for agents to do field underwriting, making sure that a particular risk fits underwriting requirements of a given company far more efficiently.
Benefits to the multi-line agency
Beyond the benefits of managing traditional commercial property/casualty insurance, there are substantial benefits for the agency that sells and services group health and life, employee benefits, workers’ comp services and claims management for the self-insured or for captives.
Take for example the management of group health and life. While insurance companies might view a large case as one with 10,000 lives, most brokers work with case numbers that are much smaller. But, no matter the size, each case is unique and is essentially a negotiation between the insured, the broker, and one or more carriers.
If the case is managed in a paperless environment, the ability of the broker to interact with multiple carriers is simplified which enables improved pre-sales and submission management. The ability to submit a case to multiple carriers electronically enables faster response by the carrier as well as the ability to ensure competitive pricing for the client.
Most independent agents and brokers must deal with the competitive pressures of the major brokers. Several years ago, the major brokers generally looked at writing the “large commercial account” and those accounts were mainly Fortune 1,000 types of accounts. Those target accounts were those that had multiple locations, more than 2,500 employees, and generally difficult risks to insure requiring significant expertise from the broker.
So, a main street agent could be fairly successful by writing accounts that were not on the radar of the major brokers. But that has changed. More broker groups have emerged via acquisition, there are major brokers are in all 50 states, and the traditional main street agent must work harder than ever to retain business and continually prove value.
Once in a digital environment, the main street broker has the ability to prove his value with established technologies. One such technology is collaboration. Collaboration enables a broker to take a digital file and enable multiple parties–such as underwriters, risk managers and claims managers–to view the file online and in real-time.
Often, a case is submitted by the broker to the company, creating an ensuing dialog between the underwriters involved, the broker and perhaps, other parties. This dialog might take as long as a month before all concerned can make a decision as to price, acceptability, endorsements, coverage, etc.
With collaboration, the submission/ underwriting process can be shortened by weeks. By being able to discuss the case with several geographically dispersed decision makers in a “chat-room” environment with the risk manager, loss control specialist and others, the linear and sequential nature of insurance underwriting can be eliminated and a case is underwritten faster than ever before.
For the most part, customer service is one of the most important differentiators of the independent agency. Over the years, independent agencies have seen their role in customer service become marginalized by carrier operated service centers. For many customers, there is an ease of use associated with calling the carrier, but for many others, they need or prefer to have the agency provide customer service. And agencies are now realizing that by delivering this service, they enhance their value to the customer.
This is very true with commercial customers that require a certificate of insurance. Some carriers can offer this service to customers; others cannot. With a service portal provided by the agent, customers can simply go to the agent’s Web site and access and download the certificate. And, by operating the portal, the agency ensures that all of its customers have the ability to self-serve.
In addition to the service portal, the agent has the opportunity to offer additional content and information to their customers. Again, this is all made feasible and possible by imaging and content management.
So, for example, a customer that is a construction company, while downloading a certificate for a new bid, might also be able to download the most current information on new loss-control techniques for construction sites.
Via the portal, the independent agency is able to exceed customer expectations by delivering useful content in a very professional way.
Technology, culture shock and beyond
For the independent agency, the easiest way to go paperless is to phase in the process over time, taking an accounts-centric approach, starting with its key accounts.
Once introduced, the paperless process will provide immediate support in the customer service area. Knowledge workers will not have to hunt for customer files when an insured calls in, but will be able to instantly access a complete view of the customer account at their desktop.
From a technology point of view, when selecting an imaging or Business Process Management system, it is important to have technology that goes beyond the imaging of documents. Paperless processes all start with digitized documents, but these then need to be placed into a business process workflow.
A robust workflow enables the processing of imaged documents. If the optimal data management and Business Process Management systems are in place, any agency can gain the same competitive advantage as larger brokers.
Changing traditional mindsets
Interestingly, the challenge is as much managerial as it is technological. Workers want their paper; they feel more secure with it, and often, it will take radical measures, such as the placement of the printer in a very inconvenient location, to get them to change habits. Going paperless is truly about changing mindset and culture.
For many organizations, “going digital” is a business transformation issue.
Winning the hearts and minds of those who are resistant to change involves the communication of management’s vision to the workforce. It’s hard to change what is comfortable, so management has to provide the motivation and the inspiration for all employees to understand the benefits of new technology.
The industry is seeing a trickle down from the big brokers to mid-size brokerages that are adopting a paperless environment aggressively because it gives them a tremendous ability to compete with larger agencies. Mid-size brokerages that are acquiring other agencies, or are merging with peers, find that going paperless is a way to handle more business without having to add a tremendous number of new people.
In fact, because of increases in productivity attributed to the “digital workplace,” an agency that is “digital” can maximize return on investment from an acquisition because the acquiring agency has a higher level of productivity than the acquired agency. So, for example, if the acquired agency had 10 CSRs, the acquiring agency may be able to handle the same business volumes with five or six CSRs.
That’s all very well for the larger agencies and brokerages, but what if you are a one-location storefront and the cost of going paperless is prohibitive?
There is a way for several small organizations to pool resources and become paperless together. Application Service Providers (ASP) can provide the backbone technology to several customers to create an economy of scale.
They create a secure environment that prevents any agency from accessing data from a potential competitor. Thus, they enable smaller agencies to realize some of the same benefits secured by their larger brethren.
The ultimate goal
Anything that improves communication will have benefits to all: customer, underwriter and broker. Ultimately, what the paperless environment does for agencies is to allow them to compete for larger accounts. If a small or midsize agency installs such a system and experiences productivity improvements, it may then be motivated to employ a higher level person who can do loss control, or a claims consultant or claims advocate who can work with the company’s larger customers and keep larger firms from taking away that customer. But it is vital to understand that in going paperless, you are reshaping your entire organization and redefining everyone’s work role.
The ratio of accounts a service representative can now handle will increase. As the agency grows, you will likely find yourself hiring fewer people to handle the same volume of business. Going paperless has great return in terms of productivity, customer service and the ability to retain customers. Meanwhile, the business of the agency evolves as it reinvents its processes.
John T. Sarich is the industry marketing manager, insurance, for FileNET Corporation, technology company which works with over 700 insurance agencies and carriers. Once paperless, the insurance agent also has the ability to share information between the account executives and customer service people across offices and locations.
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